What is an externality? How are positive externalities different from negative externalities?
What will be an ideal response?
An externality is a by-product of an activity that hurts or helps someone who is not involved in that activity. A negative externality imposes a burden or cost on others. A positive externality confers benefits on others.
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According to the efficient markets hypothesis,
A) common stock prices should be constant. B) the price of a corporation's stock is likely to fluctuate substantially in response to news about changes in the company's short-term prospects. C) the price of a corporation's stock will fluctuate significantly only in response to news about changes in the company's long-term prospects. D) price fluctuations in common stock are a response to fads and are only infrequently the result of changes in the expected profitability of the companies involved.
Which of the following is true of a change in dividend payments?
A. There is no substitution effect because a change in dividend payments does not change the trade-off between work and leisure. B. There is no substitution effect because a change in dividend payments does not change a household's permanent income. C. There is no income effect because a change in dividend payments does not change the trade-off between work and leisure. D. There is no income effect because a change in dividend payments does not change a household's permanent income.
In oligopolistic markets
A) there are many firms. B) there are no barriers to entry. C) there are only a few firms. D) all firms are price takers.
When a product depicted on the horizontal axis of a typical indifference curve model of behavior is taxed
A. the budget line becomes flatter. B. all the indifference curves of the consumer become steeper. C. the indifference curve of the consumer shifts right. D. the budget line becomes steeper.